Stephenson began his career in 1982 with Southwestern Bell Telephone in the information-technology organization in Oklahoma. Late in the 1980s through 1990s, he progressed through a series of leadership positions in finance, including an international assignment in Mexico City. In July 2001, he was appointed Chief Financial Officer for SBC, helping the company reduce its net debt from $30 billion to near zero by early 2004. From 2003 to 2004, Stephenson served as Chairman of the Board of Directors for Cingular Wireless. In 2004, he was named Chief Operating Officer of SBC and also appointed by President Bush as National Security Telecommunications Advisory Committee.

Stephenson continued as COO following SBC's acquisition of AT&T in 2005, responsible for all wireless and wireline operations at AT&T. In April 2007, AT&T announced Stephenson would succeed retiring Edward Whitacre as CEO.[2]

On July 26, 2009, Stephenson was falsely reported as having died after falling into a coma following a massive cocaine binge during a party at his mansion.[3] The report originated from CNN's iReport website, although it was later taken down. Although the hackers who created the false report have never been identified, it is suspected that they were 4chan users who did the hack in retaliation for AT&T's decision to block the site for its broadband customers, a decision which had been provoked by an earlier denial-of-service attack against one of AT&T's customers that originated from a 4chan user. Access to 4chan on AT&T broadband services has since been restored. In 2013, Stephenson received $23,247,167 in total compensation, with a base salary of $1,633,333.[4] In April 2015, Stephenson was named as a defendant in a lawsuit filed by Knoyme King, an assistant at AT&T. According to King, Stephenson was complicit in covering up racist texts sent by then-President Aaron Slator.[5]

He, as well as fellow boardmember James Turley, CEO of Ernst & Young, publicly opposed the BSA's former policy banning openly gay Scouts and stated their intention "to work from within the BSA Board to actively encourage dialogue and sustainable progress" in changing the policy.[8][9]